Appendix: Review of the National Audit
Office's Corporate Governance, by John Tiner (January 2008)
1 Summary
1. The National Audit Office is a unique and critically
important organisation in the UK public sector. Its head, the
Comptroller and Auditor General (C&AG) is an Officer of the
House of Commons and enjoys complete discretion over the discharge
of his functions. This combined with his appointment by Her Majesty
the Queen on a motion from the House of Commons makes him completely
independent of Government, a sine qua non for the position. The
current C&AG has put in place a number of governance processes,
but in their effectiveness these fall short of what is currently
best practice, even when taking into account the unique role of
the Office. In the exercise of his responsibilities the C&AG
must, in my view, rely not only on the powers given to him by
Parliament, but also on the moral authority which comes from the
National Audit Office (NAO) maintaining the highest standards
of governance.
2. I have established three objectives in framing
my proposals for the future governance of the NAO:
- The C&AG must have the
authority to form completely independent judgements about the
audits and value for money and other studies conducted by the
NAO and the presentation of these to Parliament.
- The NAO must maintain systems of governance and
internal controls consistent with best practice, applied in ways
which do not fetter its independence from Government, and to report
publicly on these systems in its Annual Report.
- The NAO must conduct its work according to relevant
auditing and professional standards and prevailing best practice.
3. I propose significant changes to the current governance
structure. My main proposals are:
- The NAO should be formed as
a body corporate with a governing board comprising a majority
of independent non executive directors. Its main functions should
be to set the strategy of the Office, support and oversee the
work of the C&AG, ensure the Office (including the C&AG)
conducts its business in an economic, efficient and effective
way and satisfy itself that the systems of governance and internal
controls operate effectively and to the highest standards. The
Board should have a Remuneration Committee and an Audit Committee
comprised entirely of non-executive directors.
- The Chief Executive (who would be styled the
C&AG) should have complete personal discretion as to the audit
judgements he reaches and the presentation of those judgements
to the Public Accounts Committee and other committees of Parliament
as may be necessary.
- Both the Chairman and Chief Executive of the
NAO Board would be appointed by Her Majesty the Queen on a motion
from the House of Commons. The Chairman and the other non-executives
should be appointed for a term of 3 years renewable once. The
Chief Executive should be appointed for a fixed term of 8 years
which cannot be renewed.
4. I recognise that to implement my proposals it
will be necessary to introduce new primary legislation. I understand
a possible mechanism to effect this exists in the Constitutional
Renewal Bill foreshadowed in the most recent Queen's Speech.
5. While I have sought to understand the governance
arrangements in the devolved administrations they do not fall
within my terms of reference and I make no comment on whether
my proposals for the NAO have any application in the devolved
administrations.
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